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Required information [The following information applies to the questions displayed below.) Most Company has an opportunity to invest in one of two new projects. Project
Required information [The following information applies to the questions displayed below.) Most Company has an opportunity to invest in one of two new projects. Project Y requires a $330,000 investment for new machinery with a six-year life and no salvage value. Project Z requires a $330,000 investment for new machinery with a five-year life and no salvage value. The two projects yield the following predicted annual results. The company uses straight-line depreciation, and cash flows occur evenly throughout each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project Y Project z $375,000 $300,000 Sales Expenses Direct materials Direct labor Overhead including depreciation Selling and administrative expenses Total expenses Pretax income Income taxes (34%) Net income 52,500 75,000 135,000 27,000 289,500 85,500 29,070 $ 56,430 37,500 45,000 135,000 27,000 244,500 55,500 18,870 $ 36,630 4. Determine each project's net present value using 10% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.) Project Y Chart values are based on: n = Select Chart Amount x PV Factor = Present Value Net present value Project Z Chart values are based on: n = Select Chart Amount x PV Factor = Present Value Net present value
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